Is your primary residence your largest life investment?

38 Replies

Hi guys. This is just a sort of informal poll.

Starting with me: no, it isn't. Not by a long shot. That may change someday, but right now, it's a good idea for me in my area.

most investors after a while its not  but for most of the US homeowners it is.. we have to keep in mind that the vast majority of homeowners do NOT own any rentals.  so their home is the largest investment.

Although I suspect many investors who own their home on the West coast and buy SFR's in the mid west for sure their home is far more valuable than any single family they would buy in the Cash flow markets..

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For most, the home and 401k is where net worth sits.  Lots of people become the "accidental millionaire" with their homes, particularly in the cyclical markets (although, buying in good markets is not so accidental).

School district drove our decision...along with needed space...not our largest investment.  Incidentally, the lenders love seeing modest homes and cars on personal balance sheets (or not on the balance sheet at all).

If you are click bait you have me hook line and sinker!  LOL

Not for me because I was fortunate enough to read Rich Dad Poor Dad and understand what scam the rat race is from a young age.  It still took me a while but knowing how the system is set up to me has made all the difference.  

But for many like my parents or most other Americans who were not fortunate enough to have the vail of the financial world exposed to them I believe buying a house will be the biggest financial decision of their life, and it is a damn shame!  That is if they can even ever afford to buy a home.

@Jay Hinrichs

Jay, in your institutional memory, was there ever a time when US homebuyers or a segment of them didn't try to buy, as a default, the very largest and most expensive primary residence a loan officer told them they could afford?

Originally posted by @Mike Dymski :

For most, the home and 401k is where net worth sits.  Lots of people become the "accidental millionaire" with their homes, particularly in the cyclical markets (although, buying in good markets is not so accidental).

School district drove our decision...along with needed space...not our largest investment.  Incidentally, the lenders love seeing modest homes and cars on personal balance sheets (or not on the balance sheet at all).

 The other thing we saw that the lenders were always looking for was that we both had W-2 jobs. Always happy to know there was money coming in from a different source than our rentals.

Originally posted by @Jim K. :

@Jay Hinrichs

Jay, in your institutional memory, was there ever a time when US homebuyers or a segment of them didn't try to buy, as a default, the very largest and most expensive primary residence a loan officer told them they could afford?

Back in the day before FHA loans and other low down payment programs that are out there today.. Banks required 20% down. they would not loan more than 80% of purchase price. So back in those days many HML ( and this is pre MLO licensing laws we see today) would be the help that folks needed to buy a personal home.. I started in HML with a company that did thousands of these through the 50s and 60s.

Typical scenario 100k home 10k cash down 10k HML second.. I know that's how i bought my first home in Silicon valley. price was 90k for a new Shapel home in Milpitas Had to save 9k which was no mean feat in 75 and then borrow 9k second.. add in some closings cost.

And thats how it was done at least in the SF Bay Area and 5 years earlier homes were trading in the 30 to 50k range..  I remember looking at 2 bd 1 ba condo's for 5k to 7k .. Oh well.. coulda shoulda  right..  the Milpitas home today easy 750k the condos probably 400k each if not more.. 

There might have been FHA then I just don't know and for sure there was probably VA.. but that's the route we took and many others took as well.

@Jim K. I consider my primary residence an investment in my family and my happiness, not really a financial investment. That being said, I hold substantial equity in my home and could cash out at any time. The trouble is I need to live somewhere, which means the only way to enjoy the profit is by downsizing. We will do that eventually, but it is more of a one time windfall.

@Jim K. Like @Eric Bilderback said, due to Rich Dad Poor Dad I don’t view my home as my biggest investment, although it is the most expensive single purchase I’ve made.

The rental portfolio, as a whole, is much larger than primary residence though.

Great post/poll, thanks for contributing.

Originally posted by @Jim K. :

Hi guys. This is just a sort of informal poll.

Starting with me: no, it isn't. Not by a long shot. That may change someday, but right now, it's a good idea for me in my area.

It was as our first purchas newly married, like for most.  Seems cheap now, but $139k in Denver in 1998 was a decent house in the burbs. 

Then we put a Heloc on it for REI seed $, rented it out, and moved down to a doublewide for 5 years on purpose. Our lot rent was $240/mo.

Now, no, our primary is an oh yeah forgot about that on the balance sheet, but it didn't happen accidentally. 

You can wander into debt and mediocrity but you can't wander into  having assets larger than your home.  

Originally posted by @Nick Barlow :

@Jim K. Like @Eric Bilderback said, due to Rich Dad Poor Dad I don’t view my home as my biggest investment, although it is the most expensive single purchase I’ve made.

The rental portfolio, as a whole, is much larger than primary residence though.

Great post/poll, thanks for contributing.

One of the things that Kiyosaki writes in Rich Dad but no one ever quotes is: "Most people, given more money, can only get into more debt."

The more I think about that and the people in my life experience, the truer it gets. Do you have the same experience, Nick?

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Originally posted by @Jim K. :

Hi guys. This is just a sort of informal poll.

Starting with me: no, it isn't. Not by a long shot. That may change someday, but right now, it's a good idea for me in my area.

It is for me. Didn't intend for it to be that way, but when I compare the MVs of all my holdings, I have to admit that my primary has the highest market value. We are also currently looking to upgrade our primary as well. 


I guess this really isn't the way I would recommend anyone build their RE portfolio, but on the bright side, the mortgage is about a third of what most other renters in the area are paying. I can pay it off now, but what for?

@Steve Vaughan

Steve, let me ask you this one. Does your crystal ball see the federal government coming up with the next great plan to "make the American dream of homeownership affordable again" anytime soon? Because, as I've commented elsewhere, you're SOOL buying anything with any sort of loan for under $100K in my area right now. I have a broker friend in Chattanooga and she says the only difference there is that it's anything under $150K. Everything below that price point is being snapped up as cash buys by investors right now.

Originally posted by @Jim K. :

@Steve Vaughan

Does your crystal ball see the federal government coming up with the next great plan to "make the American dream of homeownership affordable again" anytime soon? Because  you're SOOL buying anything with any sort of loan for under $100K in my area and in Chattanooga it's anything under $150K. Everything below that price point is being snapped up as cash buys by investors right now.

My area is expensive and I haven't borrowed for a resi purchase mortgage since 2007, but my guess is unless lenders are subsidized in some way to receive their minimum origination fees per file, they will continue to have floors of $100k or $150k. 

There are so many fixed tasks and costs with lending on RE.  If they need to bring in or generate $1800 say in revenue per loan, when so many fees are a % of the loan amount,  the govt would need to make up the gap IMO.  

I bet you have some ideas?  

Originally posted by @Steve Vaughan :
Originally posted by @Jim K.:

@Steve Vaughan

Does your crystal ball see the federal government coming up with the next great plan to "make the American dream of homeownership affordable again" anytime soon? Because  you're SOOL buying anything with any sort of loan for under $100K in my area and in Chattanooga it's anything under $150K. Everything below that price point is being snapped up as cash buys by investors right now.

My area is expensive and I haven't borrowed for a resi purchase mortgage since 2007, but my guess is unless lenders are subsidized in some way to receive their minimum origination fees per file, they will continue to have floors of $100k or $150k. 

There are so many fixed tasks and costs with lending on RE.  If they need to bring in or generate $1800 say in revenue per loan, when so many fees are a % of the loan amount,  the govt would need to make up the gap IMO.  

I bet you have some ideas?  

I actually have no clue what's coming, other than a general belief that something IS coming and it's most likely going to overreach with unintended consequences and be patently idiotic. Just hoping I can protect myself from the deluge of stupidity.

Originally posted by @Tony Kim :
Originally posted by @Jim K.:

Hi guys. This is just a sort of informal poll.

Starting with me: no, it isn't. Not by a long shot. That may change someday, but right now, it's a good idea for me in my area.

It is for me. Didn't intend for it to be that way, but when I compare the MVs of all my holdings, I have to admit that my primary has the highest market value. We are also currently looking to upgrade our primary as well. 


I guess this really isn't the way I would recommend anyone build their RE portfolio, but on the bright side, the mortgage is about a third of what most other renters in the area are paying. I can pay it off now, but what for?

exactly  my payment on my primary is about 1/3 of rent..  and because well you know that pesky appreciation the value has more than doubled since i built it so massive equity to boot..  banks like that for when your doing deals and you want to borrow spec money.. 

Originally posted by @Steve Vaughan :
Originally posted by @Jim K.:

@Steve Vaughan

Does your crystal ball see the federal government coming up with the next great plan to "make the American dream of homeownership affordable again" anytime soon? Because  you're SOOL buying anything with any sort of loan for under $100K in my area and in Chattanooga it's anything under $150K. Everything below that price point is being snapped up as cash buys by investors right now.

My area is expensive and I haven't borrowed for a resi purchase mortgage since 2007, but my guess is unless lenders are subsidized in some way to receive their minimum origination fees per file, they will continue to have floors of $100k or $150k. 

There are so many fixed tasks and costs with lending on RE.  If they need to bring in or generate $1800 say in revenue per loan, when so many fees are a % of the loan amount,  the govt would need to make up the gap IMO.  

I bet you have some ideas?  

what we don't see in the loan business is the service release premium the lenders make.. No lender can stay in business only making 1,800 a file they would go down the tubes quite quickly. 

Originally posted by @Jay Hinrichs :
Originally posted by @Steve Vaughan:
Originally posted by @Jim K.:

@Steve Vaughan

Does your crystal ball see the federal government coming up with the next great plan to "make the American dream of homeownership affordable again" anytime soon? Because  you're SOOL buying anything with any sort of loan for under $100K in my area and in Chattanooga it's anything under $150K. Everything below that price point is being snapped up as cash buys by investors right now.

My area is expensive and I haven't borrowed for a resi purchase mortgage since 2007, but my guess is unless lenders are subsidized in some way to receive their minimum origination fees per file, they will continue to have floors of $100k or $150k. 

There are so many fixed tasks and costs with lending on RE.  If they need to bring in or generate $1800 say in revenue per loan, when so many fees are a % of the loan amount,  the govt would need to make up the gap IMO.  

I bet you have some ideas?  

what we don't see in the loan business is the service release premium the lenders make.. No lender can stay in business only making 1,800 a file they would go down the tubes quite quickly. 

Ok, I have no idea what the actual number would be per loan to keep the lights on. The concept of a closing cost grant to make up the gap was the idea.

Seems like lenders know what their minimum is since they know how low of a loan they can fund effectively.   

Neighborhood and asset aside, they could easily say we need to make $x per file.  A $50k loan is $1k short, $75k loan $700 short etc.    Have a closing cost grant for low income folks to get funded.  

If you mean does your personal home have more equity than any other single investment property or investment then yes. With that being said I have quite a number of single-family rentals that total way more than my house in equity, But not one by itself. 

@Jim K.

As of right now, yes. But we are looking for a multi, which will cost more than our primary.

And to answer the question you asked @Jay Hinrichs -

As for myself, I have never bought a primary at the top of my loan availability, and I’m in my 4th primary home. I know to many people that are house poor. To me that makes no sense, but I’m lucky, I have no problem buying a dated house and remodeling it myself. Saves us a ton of $ all the way around.